After taking power in a bloodless coup in 1999, Musharraf declared himself president of Pakistan in June 2001. After the Sept. 11 attacks, Musharraf became a key ally to the United States in the war on terror. Five years later, he is subject to increasing criticism from the United States that Pakistan has not done enough to stop the Taliban's resurgence, as his country continues to be a base for terror plots, including the plot to blow up airplanes bound for the United States revealed in the summer of 2006. He also faces increasingly difficult challenges on the domestic front, from inflation to ethnic disturbances to calls for democratization. In this interview, Musharraf admits that the Taliban have taken hold in areas near the Afghan border, but he defends his military's efforts in the region as well as his intelligence service's success in arresting Al Qaeda leaders. This is an edited transcript of an interview conducted on June 8, 2006.

We were here in 2002. Since our last visit in 2002, the Taliban, indigenous Taliban of the NWFP [North West Frontier Province], have become an extremely violent, repressive force. Why?

Well, the battle has shifted gradually over these years after 9/11 when we, first of all, were confronting Al Qaeda, its leadership, in our cities and towns. So we arrested so many of them. Then it shifted to a more organized battle against Al Qaeda strongholds in the valleys of South Waziristan. We have succeeded [in] apprehending their leadership. To a great extent we have succeeded against occupying their sanctuaries. To a great extent they're on the run. They are suppressed; they are hiding in our mountains.

But now, as you said, the situation is a little different in that the Taliban have taken over from the Al Qaeda. They are in the lead role. Taliban, from Pakistan's point of view, I place them in two categories: One are those who are involved in fighting in Afghanistan. This is the locals of south Afghanistan and around Kandahar, which has been a stronghold of Mullah Omar. In the countryside, Taliban are extreme active there. They are abetted and supported by Taliban from this side. So [our] one task is to control that, all this linkages of Taliban across the border.

The other is the spread of Talibanization, may I say, the … obscurantist culture overflowing into our settled areas where people are talking of not allowing any music, TV sets are not to be allowed, people should grow beards and [are] acting against barbers who are cutting beards. So no songs, no television, etc. ... That is another area of focus, as far as I'm concerned, in Pakistan. But we have to check these two elements.

Is there something you would do differently if you looked back over the last four years to have prevented the gains that the Taliban have made, both in the FATA [Federally Administered Tribal Areas] and in cities like Tank and Kohat?

No, I think we did very well. We've done very well, and the actions that we've taken were all required. Initially it was Al Qaeda and not the Taliban. Taliban were dormant after all of the attacks against them in Afghanistan. They were suppressed totally.

It was Al Qaeda which had come up, and [we] reacted against them very, very successfully, I would say. But now again, the Taliban are regaining.

What I would say is the time before 9/11, I always used to have a different strategy. While the whole world had boycotted the Taliban, I always said -- and I said this to many world leaders, including President Clinton, may I say -- that we should recognize them, open embassies there and then change them from within. If that had happened -- suppose there were 70 or 80 embassies. And then this issue of the [destroyed Buddha] statues came up, and then all of the 70, 80 acted together against the Taliban at that time, all then putting all our pressure together to extradite Osama [bin Laden] before 9/11. I used to always take that as a strategy. And I spoke to everyone: "Please come and recognize them, and let's change them from within."

The United States military was frustrated when they saw the approach you took through your corps commander, Safdar Hussein, in 2004 by negotiating deals with Taliban commanders. Was that a successful strategy?

No, no, I think it didn't prove [effective], but one should never speak with hindsight. You have to apply all instruments -- military, political, administrative -- to succeed. Now, we thought if we reached an agreement, that would be the end of it; they will suppress it to peaceful means.

Well, it proved wrong, because the people who got involved on the other side, they double-crossed. While they carried on with their own activities, the army, in fact, became a little complacent that we have reached an agreement. Then we reactivated the same process again. With hindsight one can see, well, that didn't prove to be correct.

What was the agreement?

The agreement was that the militants are going to either lay down arms or they are going to be shunted out of the place, and the locals are going to cooperate with the army in asking these militants to either get off Pakistan or lay down their arms. That was basically the agreement and the cooperation between our own people with the military.

Was that a written agreement?

Yes, there was a written agreement, but one can't say that it had any legal binding as such. It was an agreement between the corps commander and one of the local militant leaders, I would say.

But it had your backing?

Yes. When the corps commander was reaching an agreement, he told me that he was going to have an agreement with [pro-Taliban Pakistani tribal leader] Nek Mohammed. …

There's a number of prominent observers of the situation in South Waziristan now saying that South Waziristan has been lost; the Taliban are powerful, and the writ of government is absent. How do you respond to that?

There is a problem there. Certainly the Taliban have risen, and the writ of the government is being challenged. That is exactly what we are doing now. We have changed strategy. We are putting a new strategy in place. …

What is the strategy?

It has four elements to it. Number one, the military element, which should continue. The military will keep operating against the cross-border Taliban interaction. We need to stop that.

The other is the political element, where we would allow progressive political forces into these areas, try to take people away from the obscurantist forces [of] the Taliban.

The third is administrative action combined with reconstruction activity, third and fourth. The administrative action is that we need to revitalize the office of the political agent, which has become almost dormant and impotent, having relinquished their authority to the military.

Now, what is happening, when we are talking of this Talibanization or Taliban culture coming up, is more to be dealt [with] through political and administrative means rather than military means. You cannot suppress extremist tendencies or extremism or obscurantist views; it's a state of mind. You cannot act militarily against it unless they are using force. Therefore, we have decided to reinforce or reinvigorate the political agent, posting the best people there, giving them force behind, and that we are going to have through levies and the Frontier Constabulary -- revitalize them, strengthen the Frontier Corps more. And the army is there.

So we are going to have the political agents more up front, the most dynamic kind. We are doubling their pay, giving special incentives. Then we are reinvigorating the FATA Secretariat under the governor. We are developing very strong linkages between this FATA Secretariat and the frontier civil government so that they act in unison against whatever developments are taking place. Then we are creating a FATA Development Authority there under able people.

Then also we are integrating the maliks and the lungee holders, those who wear turbans, and they are the senior maliks of tribes and sub-tribes. We will have councils of them, and they will act together with their political agent for development, and also take people away from Taliban and bring them under the age-old culture of the maliks there in the FATA.

So what we are trying to do is to revive the old culture of the strong political agent, working in tandem with the malik and lungee holders through councils created of them, and under the FATA Secretariat, effective FATA Secretariat, and also FATA Development Authority, pumping in a lot of money for reconstruction. These are elements of the entire strategy. I think this is the best that we could do.

Your critics are going to listen to this and say, "Well, that's the kind of thing he should have been doing two years ago"; that this is all fine and good, but that it's a little bit late; that you've sat back and watched the Taliban gain [ground]. Scores of elders have been assassinated. The political agent is not able to go to work. Journalists have had to flee the area. And you've got refugees in Dera Ismail Khan and Tank and Bannu. I have to ask why it's taken until now to devise such a strategy.

The problem with people is [they] always talk with hindsight. (Laughs.) That is their problem. They are again speaking with hindsight. We were dealing against Al Qaeda, as I said, and this situation gradually changed. It is not that right after 9/11 this was the situation and we should have been behaved like that. That's not at all the case. It was Al Qaeda who were in our cities, and 600, 700, as I said.

It was Al Qaeda in South Waziristan, in the valleys by the hundreds. We didn't even know that they are there. We took our time to ascertain that they are there, … because there was no intelligence, basically. We lacked intelligence. You know, after 9/11, the whole of 2002, I think we didn't have intelligence. We didn't have human intelligence. We never went in. So the army had to develop human intelligence. We didn't have any technical intelligence and aerial surveillance. … The intelligence, their technological and aerial [intelligence], is by United States, not by Pakistan. So we lacked all that. We took some years to develop it in[to] an effective machine of intelligence. Even now, in the five other agencies, we don't have effective intelligence everywhere in all the agencies. And these two we have concentrated.

We then saw Al Qaeda, and we started operating. We pumped in 80,000 troops against Al Qaeda. All this has been happening. Then the situation started changing. Even in Afghanistan it was Al Qaeda more than Taliban in the first. … It is now that this transformation has taken place, where the Taliban have started organizing themselves and challenging the writ of the government. This is a late development now.

You were dealing with the Taliban commanders, the Wana Five, [Waziristan tribal leader] Baitullah Mehsud, people like Nek Mohammed back in 2004. … So it's at least two years old.

Yes. Yes, indeed we were. At that time we were talking of who were Taliban, and we were talking of the pack of 52 [cards] like in Iraq; we ought to know who are these. We were actually targeting the Taliban government, members of the ex-Mullah Omar government. They were the characters who we need[ed] to find out and arrest and apprehend. We were working on that line. …

Now it is a movement which is getting more popularity from the people. This is a late development [as] of now. Therefore, anyone who says we should have been doing this, this is all talking with hindsight. …

I talked with Amrullah Saleh, the head of the NSD [National Security Directorate] in Afghanistan. He says to you that you're not doing enough, that in all this time you've arrested none of the Taliban leaders. You've done a number of arrests, I understand, on Al Qaeda, coordinated with the Americans, but have you arrested any of the leadership of the Taliban?

He is a man, I think, who needs to set his house right. He's the man who's conspiring, I think, against Pakistan, abetting with others, OK? Now this man is talking nonsense.

The number of people we have arrested [who are] Taliban -- the main spokesman of Taliban coming up in Al Jazeera and all these media of Taliban -- who arrested him? Pakistan arrested him. And just about eight to 10 months back, who arrested the ex-ambassador of Taliban who was here? Pakistan did. Pakistan has arrested so many Taliban leaders in Pakistan. This man doesn't know. He is talking nonsense, by design trying to malign Pakistan.

He handed you a list. It had a number of places on it. It had 50 to 100 names of various people that he thought you should act on. What was your response to him when he handed you that list?

I was very angry with him. Did he tell you that? I was very angry with him, because I told him: "Were you waiting for a presidential visit to inform us about these things? Is that your sense of intelligence, you being the head of intelligence?" He had met our intelligence boss, the DGI [director general of Inter-Services Intelligence], several times. I had been to Afghanistan. ... There are so many interactions that we had. I told him: "This is your sense of intelligence, that you waited for a presidential visit to hand over this list to us instead of telling us whenever you came to know?" …

He even gave a number and the address of Mullah Omar in Quetta. I said: "Your sense of urgency is this? You know that Mullah Omar is in Quetta, and now you are waiting for a presidential visit to tell me that he was in Quetta?" It was all nonsensical when we went into the details.

It's not simply the Afghans that are complaining; it's the Americans. The Americans have made a number of statements recently, earlier this year, that Pakistan is simply not doing enough. There are tripartite meetings between the Afghans, [Pakistanis] and Americans, and these things come up all the time. So it's not as if you were hearing these things for the first time.

Never does it come up in tripartite meetings -- never. Let that be very clear. The tripartite meetings are very, very good, and these points never come up there. No. They come up only beyond tripartite meetings. …

Who the hell is doing anything if Pakistan is not doing enough? Who is doing anything? Is [Afghan President Hamid] Karzai doing something? Are they doing anything?

The whole countryside is rampant with Taliban today, the south of Afghanistan. The Afghan government and all of the allied forces had better act there. Actually, when they are not being able to control that, they shift blame to Pakistan.

Yes, indeed, in Pakistan there is a problem. Yes, indeed, there are Taliban supporters here who were crossed. But we are checking all that. Is it our responsibility entirely to seal the border? Why isn't it Afghan or why isn't it the coalition forces' responsibility? Why am I to deny any access across the border? If you are talking of Kashmir, is it Pakistan's responsibility to ensure that the border is sealed, or is it the Indian responsibility also?

I have been saying let us put [a] minefield there. Let's mine the whole area so that anyone going gets blown up. Let us put a fence there, a barbwire fence, and man it. Nobody's agreeing. As far as we are concerned, let's do it. Let's do it tomorrow. Let's start. Tell President Karzai and tell this intelligence chap, "OK, let's mine the whole area." We will do it. We will do it for them so that people get blown up the moment anyone crosses. Are they agreeing? Nobody agrees to these things.

Let me switch a little bit here to the missile strikes that have been taking place over the last couple of years. Nek Mohammed was killed by a U.S. Hellfire missile. Is that correct?

We cooperate on the intelligence. We have great understanding on the intelligence and what action [is] to be taken. That is our understanding, and I think we have succeeded in many areas.

The eventual death of [Al Qaeda official] Abu Hamza Rabia -- first missile strike failed, second missile strike succeeds. But yet Gen. Shaukat Sultan stated publicly to the press that this was not a missile strike. Can you clear it up for us?

As I said, there is a lot of cooperation. I don't know such tactical details. We did strike. There is total operational and intelligence cooperation. I would like to leave it at that.

But you've seen the pictures of the U.S. missiles that were on the ground there, at Abu Hamza Rabia's, the place where he was --

Yes, we strike them with whatever means available to us. Many things are now available to us. …

But I've talked to people that are in the U.S. government and in the Pakistani military who have confirmed for me that this was a coordinated strike, but it was performed by the agency, the CIA, through a Hellfire missile. What I'm asking is, why do you not come clear about what happened?

It's a very well-coordinated operation in that, yes, we have access now to the UAVs [unmanned aerial vehicles], and it is on our demand that we fly and survey areas. There is total cooperation on that. Now, when it comes to attacking a target, it is with the UAVs; it is with our helicopters; it is with our [assets] here all coordinated.

The area that you are talking of we attacked. It is the helicopters who came in also. They fired a lot of missiles also. Then SOTF [Special Operations Task Force] landed inside the targets, and they suffered quite a number of casualties. They suffered about 19 casualties that [day]. …

This goes to the heart of the sensitivity. It seems to me you've been put in an untenable position in a sense; that you've joined the war on terrorism at the urging of President Bush, but you've been faced with a very difficult situation vis-à-vis your own people. When the Damadola strike happens, CIA comes in, runs a plane in there and attacks, and you've got demonstrations on the street, and you've created more terrorists.

No. No, that's not the case. As far as the public of Pakistan is concerned, they are supportive of all that is happening.

The public of Pakistan, but not of the NWFP?

Even NWFP. The majority, vast majority of NWFP, is supportive. … Wherever the strike takes place now, the issue is we have a clear agreement that whatever happens on our side of the border, it is Pakistan's responsibility or our forces' responsibility.

Nobody comes across. And whatever is happening across the border, coalition forces, United States' [forces], Afghan forces, that is the agreement. So therefore any action without our knowledge and without our clearance and approval and without our dictation is not acceptable to Pakistan. That is the agreement. Now, whatever strikes take place we have these resources at our disposal now. They are at Pakistan's disposal. We utilize them. And we need a lot of coordination.

So the next missile strike will be your strike?

Yes. It's going to be ours. We are cooperating. These assets are at our disposal.

Can I bring up the case of the journalist Hayat Ullah Khan? Are you familiar with him?

No.

He took the pictures of the U.S. missiles at the Abu Hamza [Rabia] -- where he was killed. Those pictures were then shown, and then a few days after that, he disappeared. Journalists' organizations, his family, have all appealed to you to respond, to investigate. Are you familiar with this situation?

Not at all. And I don't know at all. We don't know about it. If he disappeared, well, he may have disappeared. I don't know it.

Reporters Without Borders, the Committee to Protect Journalists, all have written letters to you. I have a letter from his own children. He's a journalist that I personally have worked with. So I would like it if we could get some kind of answer on what the status of --

If we have an answer we'll give it, and we'll certainly be supportive of finding out where he is. There is no problem at all.

But it's gotten a lot of international attention in the press. But I'm surprised that it's not something you're aware of.

No, I am not really aware of [that]. …

I was told by an American official that he was in Pakistani custody.

Not at all. That's not the case.

When President Bush came on his famous visit in March, what vision did he present for Pakistan's role in the region?

He didn't present any vision as such of Pakistan's role in the region. We spoke about cooperation against terrorism, and we spoke about bilateral cooperation between the United States and Pakistan.

But you're in a very difficult position. You've got enemies in India and enemies in Afghanistan and enemies on your own territory. Your situation is vital to President Bush's policies, yet he comes here without a clear vision of how you're to move forward?

Yeah, we have a clear vision ourselves. We don't need a vision on how Pakistan is to be moved forward.

… Was it a frustrating meeting for you?

No, no, it was not frustrating at all. He understands the issues involved in Pakistan. He understands how to support us. He didn't come absolutely into a blank. There is cooperation going on on the bilateral level, in the economic cooperation. It's a very broad-based cooperation that is going on.

Now, when you are talking of particularly the antiterrorist campaign, yes, indeed, we spoke of FATA, and we spoke about many things, like the reconstruction activity assistance required. He spoke of declaring that area ROZs -- reconstruction opportunity zones -- [and] allowing free access to the U.S. market for any produced [wares] there.

That is a big thing now when we go into the reconstruction side. We spoke about reconstruction there, and we presented a whole strategy of how we should spend money there to reconstruct and get people away from extremism. We presented a strategy, and he liked that.

We discussed how the United States can assist us in the implementation of that strategy. So it was a good discussion. It was an excellent discussion. I think it was an excellent interaction we had.

The perception was that you came away from that meeting empty-handed, that you didn't get anything in return. ...

That is not correct at all. I beg to differ with all this area of coming empty-handed. … Pakistan doesn't beg for something or the other. We're not doing that. We have our requirements, and people should understand our environment and assist us in that. … We have our own strategy; we have our own interests which we look for; and we have our direct bilateral interests with the United States which we dealt [with]. In that we had a lot of successes. …

You're making great sacrifices in the NWFP, and many observers here would say you're not getting much in return for that; there's not much in it for you. Prior to 9/11, you weren't having a lot of trouble in that area. Ever since then, you've been signed up with the war on terrorism, and you've been in a position of attacking your own people.

I would say that we have gained a lot. We have gained financially. The economic upsurge that is going on, the economic turnaround that has taken place, has a lot to do with our antiterrorist activity, because basically our major problem was debt [reduction], debt write-offs, debt swaps with the Paris Club, which happened. That is what was the major element which turned our balance-of-payments deficit into a surplus.

So it's been worth it?

Yes, indeed. Of course. Financially and economically it has been. Then we have had a number of other areas where assistance had come, even financially.

We are getting our F-16s now. We are going to get them very soon. The defense cooperation has increased between the United States and Pakistan. Economically also, we are being funded in various areas much more than before. If it can work, even the financial cost of the Paris Club debts and debt relief that we got, I think it will account for about $4 billion to $5 billion in all.

Let's not work everything into money. But we have gained a lot on a broad-based understanding with the United States. So there has been a lot of gain.

You've got your troops deployed in South Waziristan, North Waziristan. [What about other trouble spots, such as Baluchistan or Bajaur?]

We have deployed as many troops as possible. Now, as far as Baluchistan is concerned, we have deployed a brigade also, and that is the maximum that we could spare.

We don't have unlimited resources. We have deployed as much as we can. There are about 80,000 troops in [the] frontier. We have deployed now a brigade on the border wherever it is required -- the border which is common to Kandahar, that area. I think that is quite satisfactory. On the operational side, our interaction with U.S. forces in Afghanistan, I think this is a good arrangement that we've made.

But it seems to me that it must rankle you that you have sacrificed so many of your men, and yet you still get this constant barrage of criticism, both from the Afghans and, more importantly, from the Americans.

That is very annoying. That is extremely annoying. I get really saddened and annoyed at that, because we are doing so much, and we have given so much sacrifice. Therefore I don't accept that at all, that Pakistan needs to do more. …